Remember Libra, Facebook’s ambitious digital currency project? It aimed to revolutionize how we handle money globally. But, why did it stir up so much trouble and eventually, well, disappear? Let’s break down why many considered Libra to be dangerous.
First off, there were major concerns about “monetary sovereignty.” Essentially, governments and central banks feared that a global currency like Libra, used by billions, could threaten their control over their own money supply and financial stability. Think of it: if everyone started using Libra, it could potentially compete with national currencies like the dollar or the euro!
Then there was the elephant in the room: data privacy. Facebook, now Meta, has a well-documented history of privacy issues. Handing over financial transactions, on top of all our personal data, to a company with such a track record raised massive red flags about who would control our financial information and how it would be used.
Another huge worry was Facebook’s sheer size and influence. With billions of users, regulators were concerned that Libra could create a concentrated economic power, almost like a “shadow bank” operating without the usual regulations. They feared it could lead to a financial crisis if not properly managed, or even facilitate illicit activities like money laundering.
At the time, the cryptocurrency market lacked clear regulatory frameworks. Governments worldwide, including the US and European Union, expressed serious apprehension about how to supervise such a massive project and ensure consumer protection. This lack of clarity was a major hurdle for Libra.
Due to this intense regulatory pushback and concerns, many of Libra’s initial high-profile partners, like PayPal, Visa, and Mastercard, withdrew their support. The project, eventually renamed Diem, ultimately shut down in January 2022. The former head of the project even called it a “100% political murder” due to pressure from regulators.
So, while Libra aimed to solve real problems like making cross-border payments easier, the potential dangers related to monetary sovereignty, data privacy, market dominance, and regulatory uncertainty proved too significant for it to move forward. It remains a cautionary tale for any large tech company venturing into global currencies.